The Finance Act 2019 can easily pass for the most widely debated and discussed law in Nigeria in recent times. It has been trailed with barrages of public opinion from its legislative stages and after the presidential assent on January 13, 2020. The broad scope of the Act and its far-reaching changes on pre-existing tax laws and practices is, no doubt, a factor to such keen public interest. However, much of the uproars on the Act emanate from common misconception of some proposals of the preceding bill, which are still carried on after emergence of the Act. An instance is the erroneous assumption that the requirement of Taxpayers Identification Number (TIN) for the opening and continued operation of bank accounts extends to private accounts, whereas the Finance Act confines this requirement to purely business accounts. There was also much doubt on the commencement date for the Act especially as it concerned the new VAT rate of 7.5%, before the gazetted copy stated the date of the assent, January 13, 2020 as the take-off date.
With the commencement of the Act, the era of speculation has given way to the era of implementation and compliance. Federal Inland Revenue Service has therefore issued a number of public notices to clarify provisions of the Finance Act 2019, and guide the public on compliance. Key provisions of the notices are highlighted below;
- Public notice on mandatory use of Taxpayer Identification Number (TIN): Every company or business shall provide their TIN to relevant providers of financial services not later than 12th April, 2020 in order to update their existing records. Banks and other financial institutions are now to request for TIN as a precondition for opening new accounts for companies and any other businesses.
- Public notice on due date of filing and due date of payment: Payment of Companies Income Tax is to be made on or before the due date of filing in one lump sum or installments upon self assessment. FIRS have by the public notice granted approval to any tax payer that wishes to pay in installments prior to the due date of filing. Any tax due and unpaid by the due date of filing shall attract interests and penalties. A company that pays all its tax 90 days before the due date of filing shall be granted a bonus of 2% if it is a medium sized company and 1% if it is any other type of company. The bonus may be set off against future taxes.
- Public notice on Value Added Tax (VAT): All systems are o reflect the new VAT rate and the mandatory monthly rendering of VAT returns should be made by using same starting from February 2020.
- Public notice on regularization of tax status of dormant companies: All dormant companies are advised to regularize their tax returns with FIRS on or before 30th June 2020. A dormant company in this regard is a company that has formally informed FIRS that it would be temporarily out of business for at least a period of one financial year due to understandable exigencies e.g. adverse economic circumstances. Dormant companies may substitute “Statement of Affairs” for “Accounts” in their tax returns.
- Remittance of Stamp Duties: FIRS maintains that it is the only competent authority mandated to impose, charge and collect Stamp Duties on dutiable instruments, where such instruments are executed between a company and an individual, group or body of individuals.
The numerous amendments of the various tax laws by the Finance Act 2019 pose a challenge of comprehension on the Act. This necessitates intensified clarifications on the Act through more notices, not just from FIRS but also from other tax authorities – State revenue agencies and Customs Service, as well as interactive sessions and seminars. Taxpayers are also advised to pay keen attention to new procedural rules in the Act and work closely with their consultants in complying with the affected tax laws.
Phillips Akintola Michael
Tax and Dispute Resolution
Hermon Legal Practitioners